Since Labour’s election win in 2024, the dominant economic narrative has been about prioritising long-term economic growth. But since the start of 2026, the Government has also sought to relieve short-term cost-of-living pressures. The shift in focus reflects the electoral reality that economic insecurity is affecting Labour’s support across the spectrum. Recent research by the Nuffield Politics Research Centre and the Joseph Rowntree Foundation found that people who feel financially insecure are leaving Labour in disproportionate numbers.¹ Prioritising an ‘economic feel-good factor’ is therefore crucial to Labour winning back support. And that means more than simply putting money into peoples’ pockets; it’s also about small business confidence, tackling empty shops on high streets, and restoring the feeling that if you play by the rules, you will be rewarded.

The challenges with delivering that ‘economic feel-good factor’ are both the ongoing impact from war in the Middle East, and the fact that fixing the foundations of the economy after 14 years of Conservative mismanagement means the fruits of growth were always unlikely to be delivered swiftly. There is an inherent tension here that needs to prompt more honest conversations about trade-offs, and what can realistically be delivered in the short-term. We also need to open the national conversation about who helps generate economic growth and how it manifests in our respective communities.

The government’s Modern Industrial Strategy is providing the strategic framework for long-term economic growth that has been missing in the UK for too long.² It prioritises eight sectors, some in which we are already world-leading, and others that are innovative industries of the future in which we must grow our capabilities to remain globally competitive. Driving growth by gearing your economic resources to expanding markets is an accepted part of economic orthodoxy. But it is also important to recognise that not everywhere can be the new silicon roundabout, AI Growth Zone, or life sciences hub. As Giles Wilkes writes in a recent report for the Institute for Government, ‘the new and cutting edge is only a small part of any attempt to improve dynamism […] growth comes from every sector, not just the exciting new ones’.³

The Chancellor’s entrepreneurship adviser was criticised in February for seemingly downplaying the importance of small and medium businesses by saying, ‘you wouldn’t put the same tyres on a McLaren as a Ford Fiesta’.⁴ It is fair to say most people would not expect the same approach for every size of business and that her perspective reflects her role in boosting entrepreneurship. However, it hit a nerve with a SME business community that feels misunderstood by government as it faces multiple financial and employment challenges simultaneously. 

It is important to recognise that the Government is providing support to those businesses crucial to our ‘everyday economy.’ It has introduced policies to tackle overdue payments to small businesses in supply chains, is investing in left-behind areas through Pride in Place Funding, and is introducing Local Growth Plans for Mayoral Strategic Authorities to support the needs of local economies and businesses.

But what is also required is a stronger narrative to link these approaches together and demonstrate that we understand the perspective of small and medium enterprises (SMEs) and the challenges they face, including responding to recent tax and National Insurance changes. Many SMEs are struggling to survive and have been since the pandemic. To SMEs, growth is not a quarterly national GDP figure; it is having a system that incentivises them to take on more young people, remove a staff member from the shop floor for a few days to attend a training course, and take the risk to invest in new technology or equipment.

It is well-known that the US had strong GDP figures under Biden before the last election. Trump’s subsequent election was because people did not feel the benefit in their communities. I would also argue he had a strong narrative that made people feel he was on their side. Both are reminders for Labour that the meaning of the well-known Clinton-era phrase ‘it’s the economy, stupid’ has become a bit more nuanced since 1992. Even putting money directly into people’s pockets would have limited benefit if they did not have a vibrant high street in which to spend it.

We also need to better articulate the role of local government in creating the conditions that drive economic growth. The Local Government Association estimates that local authorities across England have at least £276bn of untapped economic opportunity – equivalent to more than a tenth of national output.⁵ Councils are the enablers to the smooth running of local commerce through licensing and trading standards, business support programmes, and by providing enabling infrastructure to bring forward development sites that would otherwise remain stalled. And by running the public services that people rely on, they are also vehicles for supporting social cohesion and restoring pride in place. But too often their role is underplayed in the national conversation about economic growth and its effects on local communities.

The demise of Local Enterprise Partnerships under Rishi Sunak means that in many areas not yet covered by devolution agreements, regional conversations about investment opportunities and infrastructure requirements are not happening in the way they should. The Labour Government’s Local Growth Plans for Strategic Mayoral Authorities will re-introduce this, with an added focus on private sector investment. But these are currently out of reach for non-devolved areas, which in England still have up to £77bn of untapped economic potential.⁶

Economic growth across the UK cannot be driven by the Treasury alone. We need not only a cross-Whitehall approach, but one that puts place-based economic growth facilitators like local government, and businesses of all sizes, at the heart of the national conversation. The Government’s Mission Boards could be such a vehicle but have seemed too opaque, their outcomes unclear and their survival now questioned. The forthcoming High Street Strategy provides an opportunity to re-set our approach. We should recognise that people are more understanding of difficult choices and unpopular policies if they can see that you have considered things ‘in the round’ and have involved the people who will be affected. This is also the approach we need to take if we are to have bolder conversations about issues like council tax reform, tax incentives that drive self-employment rather than business creation, and greater local government retention of taxes to fund local priorities.

Delivering the ‘economic feel-good factor’ between now and the next General Election needs to be understood in broader terms, involve our communities more directly, and be realistic about government’s capacity to deliver in the short-term while pursuing the prize of long-term economic growth.

Lauren Edwards has been the Labour MP for Rochester and Strood since 2024

Notes

1. Nuffield Politics Research Centre, ‘Economic security as Labour’s electoral foundation’, www.jrf.org.uk, 24 November 2025.
2. Department for Business and Trade, ‘The UK’s Modern Industrial Strategy 2025’, www.gov. uk, 23 June 2025.
3. Giles Wilkes, ‘Why does the UK struggle with growth?’, www.instituteforgovernment.org.uk, 28 January 2026.
4. Simon Keegan, ‘Government adviser defends tax reforms and urges investors to place bets on growth sectors instead of ‘slow’ SMEs saying, “You wouldn’t put the same tyres on a McLaren as a Fiesta”’, www.insidermedia.com, 25 February 2026.
5. Local Government Association, ‘A force for growth: Spotlighting the role of councils in enabling inclusive economic growth’, www.local.gov.uk, 10 December 2025.
6. Ibid.